Azerbaijan, Baku, Feb. 21 / Trend A.Akhundov /
In the medium term profitability of the compulsory insurance of liability of owners of vehicles in Azerbaijan will reduce, executive director of the Azerbaijan Insurers Association Azer Aliyev believes.
"According to international practice, the first year or two of work of this type of insurance are profitable, but in the future profitability reduces to nothing. This is due to the fact that the payment significantly increase, customers are becoming more educated on this issue, that is, they begin to understand in what cases they can get a refund," Mr Aliyev told Trend on Tuesday.
He said in the third and subsequent years the situation will change dramatically.
According to the State Service of Insurance Supervision under the Ministry of Finance of Azerbaijan, some 4.343 million manat with payments of 1.009 million manat were collected on this type before the adoption of the new law "On mandatory types of insurance" in 2011. After the company started to keep the new law, fees amounted to 98,320 manat with no payments from Dec 16 until the end of the year.
After the new law "On mandatory types of insurance" came into force basic cost of insurance is 50 manat and is accepted in respect of cars with engine capacity up to 1500 cubic centimeters. With increasing engine size (from 1,500 to 5,000 cubic centimeters) ratios from 1.5 to 5 are used to value. For vehicles with engine capacity more than 5,000 cubic centimeters ratio five is used.
Today, eight of the nine companies members of the Bureau on compulsory insurance may offer services on this type. These include Pasha Sıgorta, Ateshgah Sıgorta, Ata Sıgorta, AXA MBASK, Xalq Sıgorta, Standard Insurance, AzSıgorta and Alfa Sıgorta.
There are 29 insurance and one reinsurance company in Azerbaijan. At the same time insurance license of Fidan Sigorta has been suspended.
The official exchange rate is 0.7862 AZN to $1 on Feb. 21.